St. Stephen’s Human Service programs began in the early 1970s by members of St. Stephen’s Catholic Church. The neighborhood, once one of Minneapolis’ wealthiest, had become rundown and parishioners noted that many of their neighbors were suffering from the effects of extreme poverty. They began to offer services, initially Kateri Residence and the Free Store, which were staffed on a volunteer basis by parish members. In 1981, parishioners opened the basement of the priest's residence to provide emergency shelter.

As the services grew to meet needs, staff were hired to run and administrate the programs. Throughout the 1980s and 1990s, St. Stephen’s continued to respond to community needs by developing evermore innovative outreach and support for people experiencing homelessness.

In 1991, St. Stephen’s spun off its partner nonprofit, Alliance Housing, Inc., an affordable housing developer.